Competitive Structure of the Industries - Michael porter's Model

1. Competitive Structure
Of Industries:
Michael Porter’s Model
By: Pranjali Srivastava

3. Michael Porter’s Five(Six)
Forces Model:(Objective)
• Studies about the competition in
the Industry.
• Assesses and Manages Long
Term Attractiveness of the
Industry.
• Assess the structural
attractiveness of the analysed
Industry.
• Explains the relationship between
the dynamic forces that affect
industry’s performance.

4. Porter’s Five(Six) Forces:
• Threat of Entry.
• Threat of Substitutes.
• Rivalry among existing firms.
• Bargaining power of Buyers.
• Bargaining power of Suppliers.
Another sixth force added later on in this model
• Other Stakeholders.

5. Threat of Entry:
• Existence of Barriers to entry.(Patents, Rights etc.)
• Government Policies .
• Capital Requirements.
• Product Differentiation.
• Monopoly Elements.
• Access to Distribution.
• Customer Loyalty to established Brand.
• Industry Profitability(The more profitable the industry
more Profitable it will be for new Entrants.

6. Threat of Substitutes:
• Perceived level of Product Differentiation.
• Buyers Switching Costs.
• Number of Substitutes available in the market .
• Availability of Close Substitute.
• Customer loyalty towards their Brand.
• Quality Depreciation.
• Ease of Substitution.
• Substandard Product.

7. Rivalry Among Existing
Firms:
• Number of Firms and Their Relative Market
Share, Strengths etc.
• Degree of Transparency.
• Level of Advertisement Expense.
• Sustainable Competitive advantage through
Innovation.
• Diverse Competitors.
• Exit Barrier.

8. Bargaining Power of
Buyers:
• Degree of Dependency upon Existing channels
of Distribution.
• Force down Prices.
• Buyers Switching costs relative to Firm’s
Switching Costs.
• Buyers information Availability.
• Buyers price Sensitivity.
• Differential Advantage of Industry Products.
• Availability of existing Substitute Products.

9. Bargaining Power of
Suppliers:
• Suppliers switching costs related to firm
Switching Cost.
• Degree of differentiation of Inputs.
• Importance of Buyer to the Supplier.
• Extent of Substitutability of the Product.
• Extent of Differentiation or Standardisation of
the Product.
• Importance of the Product to the Buyer.

10. Sixth Force :Other
Stakeholders
• It was added in the revised 1990s model.
• Impact of complementary product and
services.
• Reliability of the functions.
• Stakeholders are also the owner of their
stakes in the organisation.

11. Limitations of Porter’s
Model:
• Its just a snapshot of an Industry at a
time.
• It does not tells about the Complex
Dynamics of the Industry.
• It does not takes into account
Corporate Social Responsibility.

12. THANK YOU